IBL directors ‘complicit 100 per cent’
Investigations begin to reveal former directors knew of fraud, actively sought to cover it up and even sought CBK’S help to maintain “positive image” — Agency
“Truth will out”, the saying goes.
But the veracity of this old dictum can at times confound, or cease to make sense, particularly in instances where a lie is manufactured, watered and tended to, to blossom into an alternative truth, one that then becomes the benchmark for what is to be said and/or believed. It is this “alternative truth” that the Central Bank of Kenya believes has been peddled and fed to the Kenyan public regarding the Imperial Bank saga.
The admitted fraud at Imperial Bank Limited (IBL) was allegedly done under the patronage of a former group managing director, the late Abdulmalik Janmohamed, in complicity with senior managers. That admission was made in a proposal requesting CBK to place the bank under statutory management for a brief period, and facilitate the opening afterwards.
When CBK analysed the proposal and admissions, it immediately placed the bank under receivership; the level of fraud was staggering. This appears to have caught the directors, who had expected a favourable response, off-guard. The CBK, together with the Kenya Depository Investment Corporation (KDIC), embarked not only on investigating the activities of the late GMD and management, but also those of the board of directors and shareholders, to determine their role and the benefit if any.
What followed was a sustained onslaught against CBK and KDIC by a PR firm commissioned by certain interested parties in the matter. This, however, did not deter the CBK and KDIC from carrying on with forensic investigations into affairs at the bank which, it would emerge later, go back 13 years.
And whilst the story of the directors and shareholders has been repeated extensively in social and mainstream media, the CBK position was finally revealed in an affidavit filed on February 28, 2016, “to provide a factual representation of the matter” and, separately, “to correct misleading positions taken on the role and involvement of the CBK”.
Auditors who don’t audit
In the affidavit, Mohamud Ahmed, KDIC’S appointed Receiver Manager for Imperial Bank, was respond to conservatory orders sought by the former directors of the bank, which he terms as “a blatant attempt to stop the forensic investigation into the admitted grand theft of Sh38 billion”, to ensure its extent and perpetrators are not revealed.
He avers, for starters, that the auditors of Imperial Bank, PKF Kenya, who have been retained since the bank began operations in 1992, had been compromised through a massive loan at concessionary interest approved by the directors to the partners of PKF Kenya ‒ trading as East Africa Property Holdings (K) Limited ‒ which prevented them from rendering accurate audits and concealing the underlying monumental fraud.
At the point of receivership, the affidavit goes on, East Africa Property Holdings (K) Ltd had been listed as number 16 in the list of “Top 50 borrowers” at the bank, with an exposure to IBL of Sh371 million at an interest rate of 19pc, which had been agreed with PKF in relation to a threemonth deposit being placed by East Africa Property Holdings (K) Ltd.
Following the death of Janmohamed, the new appointed directors became the principal officers used to effect the fraud. These are Naeem Shah and James Kaburu who were appointed as acting managing director and deputy managing director respectively, in acting capacities. The bank’s board appointed them in full knowledge that the two were responsible for fraudulent activities in IBL. In fact, according to an affidavit sworn by Naeem in December last year, they had instructions “to keep covering up the fraud”.
Former Imperial Bank board chair Alnashir Popat.